Amazon's Latest Proposal Rankles Hachette and Authors

Jul 09, 2014

The acrimony between Amazon and Hachette does not appear to waning. And the stalemate between the two companies, over sales terms, continues to play out in newspaper headlines.

On Tuesday, several news outlets reported that v-p of Kindle content at Amazon, David Naggar, sent a letter to various Hachette authors, literary agents and president of the Authors Guild, Roxana Robinson, proposing that the e-tailer and publisher forgo all revenue on e-books sold through Amazon and, instead, give them directly to the authors.

Naggar's letter, posted in full on GigaOm, met with two statements, the first from Hachette, and then a follow-up from Amazon. Hachette said that it welcomed Amazon withdrawing the sanctions it had "unilaterally imposed," and that "the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation."

Amazon then responded to Hachette's statement, saying: "We call baloney." The e-tailer went on to say that Hachette, as part of a "$10 billion global conglomerate," can afford the proposal Naggar floated and that the publisher is making it clear that "they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage."

The Guild's Roxana Robinson responded to Naggar's letter, in the The New York Times, saying that it "seems like a short-term solution that encourages authors to take sides against their publishers. It doesn’t get authors out of the middle of this--we’re still in the middle."

In Naggar's letter he also states that Amazon attempted to settle the dispute as far back as January, when it "reached out to Hachette for the first time to discuss terms...for our contract which terminated in March."

Responding to this point, a Hachette executive familiar with the negotiations said: "We made an offer in April that was the largest we'd ever made to any retailer, and in May proposed another that was higher still. Both offers were rejected."

The full letter from David Naggar to authors is posted below, followed by the initial statements from Hachette and Amazon:

"Dear --,

I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.

Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.

We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.

Here’s what we’re thinking of proposing to them:

• If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.

• Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven’t gone on sale yet, reinstate pre-orders.

Here’s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.

We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.

What do you think? Would this be helpful, especially for midlist and debut authors?

Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?

Thanks and look forward to talking.”

Hachette statement:"Amazon has just sent us a brief proposal. We invite Amazon to withdraw the sanctions they have unilaterally imposed, and we will continue to negotiate in good faith and with the hope of a swift conclusion. We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation. We look forward to resolving this dispute soon and to the benefit of the writers who have trusted their books to us.”

Amazon statement:"We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn’t be ‘suicide. They can afford it. What they’re really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. All the while, they are stalling and refusing to negotiate, despite the pain caused to their authors. Our offer is sincere. They should take us up on it.”

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